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Perdoceo Education: Riding The Online Wave

Arrancar Capital profile picture
Arrancar Capital


  • Online education is becoming increasingly common as individuals seek to further their education remotely.
  • Perdoceo, a recession resistant stock, is attractive in the face of prolonged economic declines.
  • The share price is undervalued at $17.28 (vs. target price of $29.26).

In my previous article, I mentioned that I will cover more companies within the education industry. Today, we will take a look at Perdoceo Education Corporation (NASDAQ:PRDO), formerly known as Career Education Corporation. They provide online & on-campus post-secondary education services (Bachelor's, Associate, Master's & Doctoral) through two universities-Colorado Technical University (CTU) and American Intercontinental University (AIU). We are issuing a BUY recommendation with a target price of $29.26 based on the relative valuation methodology. This presents a 69.33% upside to the current price of $17.28. Our core thesis is that the company will ride on the trend towards online education with COVID-19 acting as a catalyst in the United States. The company's earnings present an undervaluation situation that we suggest investors to take advantage of.

Data: Perdoceo

Company Overview

The company has two main subsidiaries-Colorado Technical University (CTU) and American Intercontinental University (AIU) representing 54% and 46% of total revenues, respectively.

Data: Company Annual Report

Depending on the specific degrees, CTU and AIU offer 3 learning options for students to choose from: Online, Campus, Blended. The online option caters to students who may not have the opportunity to travel to campuses regularly. The campus option is needed for degrees such as Electronics Technology and Computer Science, which require students to attend practical lessons. The last approach combines the best of both worlds, allowing students to attend certain lessons remotely and practical lessons on campus. Both universities have two campuses each and an additional online headquarters in Arizona and Colorado.

Campus Locations; Data: Company Annual Report

AIU Houston; Source: AIU

CTU Colorado Springs; Source: The Chamber

As stated in the company's mission, the key difference between two universities is that AIU focuses on helping busy students get their degree as quickly and efficiently as possible. This can be seen by comparing

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Arrancar Capital profile picture
Hey there, I am an investor looking to share my investment ideas with the world. I embrace all kinds of stocks and believe that we can find the most value in underappreciated companies and the occasional short-term plays. I warmly invite you to join me in my investment journey.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in PRDO over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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